Former AIG Exec May Be Off the Hook
Posted on May 22, 2010
People close to the case are claiming that AIG executive Joseph Cassano will not face federal charges related to allegations that he misled investors over the company’s handling of mortgage-related securities prior to the economic crash and subsequent Wall Street bailout.
The New York Times:
Federal prosecutors investigating the events leading up to the collapse of the American International Group in 2008 will not bring charges against Joseph Cassano, the chief executive of the unit that insured mortgage-related securities with calamitous results, according to two people briefed on the matter.
Mr. Cassano and other executives at A.I.G.’s Financial Products unit, which had insured almost $80 billion in mortgage-related securities, came under scrutiny by the Department of Justice after the insurer failed in September 2008. Investigators were examining whether Mr. Cassano misled investors when he stated in December 2007 that the company’s obligations on the mortgage securities it backed were unlikely to produce losses.
The Federal Reserve Bank of New York and the United States Treasury rescued A.I.G. with a taxpayer backstop totaling $180 billion. Nearly $30 billion of that went directly to banks like Goldman Sachs and Société Générale, which bought insurance on mortgage securities from A.I.G. during the credit boom.
The people briefed on the decision not to bring charges spoke on condition of anonymity because they were not authorized to speak publicly on the matter.
Joseph Cassano was chief executive of the unit that insured mortgage-related securities at AIG.